Telecommunications

Managing your money - MONEY WATCH

November 7, 1993|By Gary Klott

CONSUMERS WHO call most 900-number telephone services will now have time to reconsider their decision before the charges start mounting.

Under new federal regulations that took effect Nov. 1, pay-per-call information services are required to provide an introductory message to let callers know exactly how much they can expect to pay and then give them a chance to hang up without incurring any charges.

Callers who hang up within 3 seconds after the tone following the introductory message can't be charged for the call. The new rules apply to all 900-number calls that will cost the caller more than $2.

Congress mandated the disclosures a year ago in an effort to curb abusive practices by some operators in the burgeoning pay-per-call industry, where consumers dial a 900-number and are automatically billed for a variety of information services, including weather reports, stock quotes, date lines, job lines, fortune telling and sweepstakes promotions.

The new rules should help consumers better understand how much they can expect to pay for their call because all fees must be fully disclosed in the opening message.

For example, if the call is billed by the minute and the program runs a certain length, the introductory message must contain the maximum charge that could be incurred if you listen to the entire program.

In some cases, the opening message will also shed light on the legitimacy of the information.

In sweepstake promotions, for instance, the sponsor will have to inform callers of the odds of winning, if known, or how the odds will be calculated.

The new rules developed by the Federal Trade Commission also set strict guidelines for 900-number advertising, resolution of billing disputes and pay-per-call services aimed at children.

Price disclosures in advertisements will have to be more prominent than was generally the case in the past.

Billing disputes will be resolved similar to the way credit-card charges are handled. Callers generally have 60 days from the billing to dispute a charge.

- SOCIAL SECURITY

HIGHER-INCOME retirees should consider accelerating income into 1993 to beat the new tax law's higher levy on Social Security benefits. Starting in 1994, as much as 85 percent of benefits will be subject to income tax. Affected are couples whose incomes - including tax-exempt interest and half their Social Security benefits - exceed $44,000 and single individuals whose incomes exceed $34,000.

Now, no more than 50 percent of benefits are taxed for couples with incomes exceeding $32,000 and individuals with incomes more than $25,000.

Retirees who face having more of their benefits taxed away next year may be able to minimize the bite by cashing in some investments early. For example, if you plan to make a withdrawal from an individual retirement account or sell some stock to take a trip to Europe, doing so by Dec. 31 may save you hundreds of dollars in taxes. If you wait until next year to make the IRA withdrawal or sell the stock, the extra income might expose more of your Social Security benefits to tax.

Before making any move, estimate your income and taxes for both 1993 and 1994 to see if accelerating income will really save you any tax.

Even if accelerating income will help, don't let tax considerations override investment considerations. If you unload an investment that has promising prospects, you could end up sacrificing more than you'll gain from the tax savings.

- WORKPLACE

EMPLOYEES WHO are scheduled for a job transfer after Dec. 31 should check their company's reimbursement policy. Many workers will need a bigger moving allowance to cover the extra income taxes they'll have to pay under the new tax law.

Workers effectively have to pay tax on reimbursements they receive for moving expenses that aren't eligible for the moving expense deduction. Starting next year, many employees will find they have to pay taxes on a larger portion of their reimbursements because the types of moving expenses eligible for the moving deduction will be scaled back. Among the casualties are pre-move house-hunting trips, temporary living expenses, the cost of meals and expenses incurred in buying, selling or renting a residence.